DoD has several special authorities regarding buyouts, including standing, permanent authority to offer them for either downsizing or workforce restructuring, without the need for OPM approval. DoD may find itself using buyouts increasingly in coming years due to disruptions caused by the base closings process.
In addition to the special general authority, DoD can pay buyouts in one of three ways:
- as a lump-sum;
- as installments of bi-weekly payments in equal amounts selected by the employee, so long as the payout is completed within one year of separation; or
- as installments of half paid six months after separation and the remainder paid six months thereafter.
Installment payments might prove attractive to employees who are trying to spread out their tax liability over several years, since the buyout payment is taxable and can push the recipient into a higher tax bracket. The maximum payment is $25,000.
If a buyout recipient elects one of the installment plans but dies before the full amount has been paid, the balance of the buyout will be distributed in accordance with the beneficiary order of preference.